The US Federal Trade Commission (FTC) may file an antitrust lawsuit to block Microsoft Corp's proposed US $69 billion takeover of video game publisher Activision Blizzard Inc, Politico reported on Wednesday, citing three people familiar with the matter.
Whether the F.T.C. will pursue the case hasn't been determined, and the F.T.C. 's four commissioners haven't voted on the complaint or met with the companies' lawyers, two of these people said. However, the FTC staff reviewing the deal was skeptical of the companies' arguments, these people said.
The investigation is ongoing, these people said, but much of the heavy lifting has been done, including depositions of Microsoft CEO Satya Nadella and Activision head Bobby Kotick. If the agency does proceed with an investigation, it could happen as soon as next month, these people said.
At the heart of the FTC's concerns is whether the acquisition of Activision would give Microsoft an unfair boost in the video game market. Microsoft's Xbox came in third place to industry-leading SONY Interactive Entertainment and its PlayStation console. However, SONY has emerged as a leading opponent of the deal, telling the FTC and regulators in other countries that it would be at a significant disadvantage if Microsoft made popular games such as Call of Duty exclusively available on its platform.
The Federal Trade Commission declined to comment.
IT House understands that in a statement submitted to the UK's Competition and Markets Authority in October outlining SONY's position, which was published on Wednesday, SONY said the deal would not only hurt its ability to compete, but would also leave consumers with less choice in games and developers with less choice in publishing them. "Microsoft is a 'tech Titan,' buying irreplaceable content at an undisputed price ($68.7 billion) to push its competitive advantage to itself," SONY said.
In its own statement, released Wednesday by British regulators, Microsoft accused SONY of making deluded claims to maintain its No. 1 position in the gaming sector. "It is implausible to suggest that SONY, the incumbent market leader with clear and enduring market power, could lose a game to Xbox, the weakest of the three console contenders."
Microsoft says it has repeatedly promised to keep Call of Duty on SONY's PlayStation, and that the game isn't a must-have as SONY says. In addition, Microsoft points out that the game is not currently available on any subscription services and adding it to the Xbox service in the future would not hurt SONY.
To a lesser extent, Google is also an opponent of the deal, according to two people familiar with the matter. The company believes that Google's Chrome OS deliberately downplayed the quality of its GamePass subscription service, and that owning Activision would further incentivizes it to do so, ultimately driving hardware sales toward Microsoft and away from Google, these people said.
Google is a bit player in the gaming industry and is winding down its own online gaming service, Stadia. However, it has come under antitrust scrutiny around the world, including for its conduct in the gaming market.
A Google spokesman declined to comment.
Microsoft has pledged to keep "Call of Duty" on SONY's Playstation consoles and recently made an offer to make the game available to SONY over the next 10 years, and it is not known how SONY will respond to that offer.
The FTC's concerns go beyond Call of Duty, however, and investigators are trying to determine how Microsoft can use future unannounced games to boost its gaming business, according to two people briefed on the review.
"Any suggestion that the deal could lead to anti-competitive effects is completely absurd." "This merger will benefit gamers and the U.S. gaming industry, especially at a time when we face increased competition from abroad," said Activision spokesman Joe Chrisinat. We are committed to continuing to work with regulators around the world to allow the transaction to proceed, but we will not hesitate to defend this transaction."
Activision also disputes Epic's claims. "Epic's allegations are nonsense," Christinat said. "We can confirm that Google has never asked us, pressured us, or made us agree not to compete with GooglePlay -- and we have submitted documents and testimony proving this."
Microsoft spokesman David Cuddy said the company is "prepared to address the concerns of regulators, including the FTC, and SONY to ensure the transaction is completed with confidence. After the deal closes, we will still be behind SONY and Tencent in the market. Activision and Xbox together will benefit gamers and developers and make the industry more competitive."
Technically, the FTC does not need to take any action at this time. Regulators in Europe and the UK have also recently conducted in-depth investigations, meaning the companies will not be able to complete deals until the spring at the earliest. That means if the FTC does Sue, it could do so in its own internal administrative court.